Initial Take on Rocket's Acquisition of Redfin

It is an interesting move, all around

By now, the news is all over the place, both industry and financial press. Rocket Companies is acquiring Redfin for $1.75 billion in an all-stock deal:

Rocket Companies (NYSE: RKT), the Detroit-based fintech platform consisting of mortgage, real estate and personal finance businesses, today announced it has entered into an agreement to purchase Redfin (NASDAQ: RDFN), a leading digital real estate brokerage, in an all-stock transaction for a value of $12.50 per Redfin share, or $1.75 billion of equity value.

Founded in 2004, Redfin is one of America’s most recognized real estate brands, operating a top-three home search platform with more than 1 million for-sale and rental listings and a tech-powered brokerage of more than 2,200 agents.

The deal will be a more of a blip on the radar for financial press, but it is a very significant development for the real estate industry. I think for the first time in a long time (ever?), there may be a real competitor to Zillow’s total dominance of real estate. At least one analyst seems to agree (via MarketWatch):

After the announcement, Gordon Haskett analyst Robert Mollins upgraded Redfin to hold from underperform and said it’s unlikely the company will receive a higher price from another buyer.

The deal is causing shares of Redfin rival Zillow Group Inc. to drop more than 3% because the “RKT/RDFN transaction … will create a more integrated real estate platform competitor,” Mollins said.

CoStar and Homes.com is trying to be Zillow’s nemesis, but they have neither Redfin’s established online/mobile presence, and they don’t have mortgage. That could, and now seems likely, to change. Even more ripples.

These are my initial takes on this deal and what it means or could mean. I think the weeks and months ahead will provide more food for thought, but I did want to get this out there for the best informed readers in the industry.

By the way, I can’t resist but pointing out that I predicted Rocket acquiring Redfin back in 2022. A few years early, but… some of the thinking remains valid so I may refer to elements of that below.

Let’s get into it.